3 Winning Moves for Turbulent Times
Don’t let uncertainty hold back development strategy
Searching for strategic sure-footedness amidst the gale-force headwinds of a global pandemic and socioeconomic upheaval has left business leaders struggling to regain control of their enterprise. Far too many are stunned and scrambling to simply survive, if they’ve been fortunate enough to weather the storm thus far.
In a previous article, I argued that uncertainty and chaotic conditions cannot, and should not, prevent leaders from developing strategy and that holding off and hoping for more halcyon times in the near future was not a winning option.
The question remains, of course, just how to do that?
Devoting significant resources to exploring new or adjacent markets with existing, new, or even to-be-developed offerings is not for the faint of heart or shallow of pocket. Few can afford that level of risk and carrying costs. The issue for most is how to refocus their current strategy to move ahead under seemingly existential constraints, not the least of which may be, in fact, shrinking resources.
Three solid strategic moves for winning during times of turbulence and threat come to mind, all of which employ a narrowing rather than broadening focus. I learned these moves nearly a decade ago from my strategy mentor Roger Martin, and I have helped several companies successfully deploy them.
I affectionately call these “the turbulent three.”
Just as it sounds, decomposition entails breaking down your overall strategy into its component parts, so that elements or positions under direct fire or requiring costly trade-offs to maintain become more visible and addressable. When you unbundle your strategy, opportunities to synthesize subordinate yet varying approaches in new and synergistic ways often appear.
Consider the dilemma facing Target in its early days in trying to carve out a winning strategy in a hyper-competitive retail space.
One the one hand, they had to contend with Walmart, far and away the low-cost retail leader. Seeing Kmart relegated to also-ran status, senior management at Target knew they couldn’t survive much less win the game of offering everyday items at rock-bottom prices. Adopting a low-cost provider strategy across the board is a race to the bottom, and generally, only one winner exists.
On the other hand, they faced successful, highly differentiated department store retailers, such as Nordstrom and Macy’s, strong brands that would be nearly impossible to steal significant share from, much less unseat.
To compete effectively, Target adopted a strategy of decomposition. It decided that groceries and everyday commodities — a box of Tide, a package of Bounty — would be sold at prices equivalent to Walmart’s in one part of the store. However, when it came to apparel and other higher-margin items, Target chose to partner with mid-level designers and well-known homemakers looking for larger and broader audiences.
These offers had no direct substitutes at either Walmart or higher-end retailers, and Target was able to create the illusion of being a discounter in one part of the store and a unique retailer in another.
In short, it broke the high-low problem down and essentially created two stores under one roof, becoming a “discount-plus” retailer, convincing people that they could get fashionable things at affordable prices as well rock-bottom pricing on everyday items from their “stores within the store.”
It worked. Target grew exponentially, carving out a unique playing field on which it could win.
“Hidden gem” is a well-known idiom connoting something which is exceptionally excellent, yet not everyone may know about it. Applied to strategy decisions, it means discovering the core element of your model that speaks to the heart of what you truly want to achieve — what you really care about. The task is to build a new approach around these small components, these ‘hidden gems.’ The essential question I ask in working with senior leaders is this: If you could only keep one thing about your current model, what would it be?”
Instagram may just owe its popularity to the Hidden Gem play. Creator Kevin Systrom’s first iteration of Instagram was not called Instagram. It was called Burbn, and was a feature-laden check-in web app blending a broad array of capabilities: checking into locations, making travel plans and arrangements, earning points for hanging out with friends, photo editing, and posting pictures, among other things.
Burbn was the proverbial “jack of all trades, master of none.” Overly complex and without a clear value proposition, it struggled to find a user base. Systrom went back to the drawing board. Remembering the inspiration for the app — his girlfriend’s unwillingness to share photos of their vacation to Mexico because of the poor image quality of her iPhone — he streamlined the interface in a mobile app, stripping out everything that got in the way of the one feature everyone loved: snapping a photo, enhancing it with a simple filter and sharing it with friends and followers, all inside 30 seconds. That was the hidden gem.
Burbn became Instagram, gaining two million users in the first fourth months. The rest, as they say, is history.
“Double Down” takes a cue from Blackjack players who double down on a hot hand. Basically, leveraging your key competitive advantage and wielding it like a hammer to produce a new or secondary win.
Case in point: When Walmart itself faced a huge hit in the form of massive erosion of their global reputation if they did not change both their stance on environmental sustainability as well as carbon footprint. Doing so would be enormously expensive, which for a low-cost provider strategy can be devastating, but would do wonders for the company’s reputation.
Walmart effectively doubled down by extending its general strategy of placing pressure on suppliers to reduce costs. In this case, it placed pressure on its suppliers to adopt more environmentally friendly strategies, refusing to purchase goods from suppliers who did not meet certain standards for water, waste, and carbon.
Basically, Walmart extended its business-as-usual model to produce a reputation for environmental leadership by doubling down on its pressure-driven supplier strategy, placing the responsibility squarely on their shoulders, and enjoying the resulting halo effect.
While each of these three tactics can offer a handrail if your enterprise is struggling to strategize during these times of turbulence and threat, nothing is stopping you from trying out all three as a process: decompose your current model, discover the hidden gem, and double down on it.
The key takeaway is simply this: you do not necessarily need to expand your horizons or venture into uncharted territory. You can stay in your lane and focus your resources on the choices that will enable you to not only survive the storm but emerge a winner.